K.S. Radhakrishnan, J.

This appeal is preferred by the Indian Bank against the judgment and decree in O.S. No. 196 of 1986 of the Additional Sub Court, Cochin against the claim for interest on the principal sum adjusted as per S.34 of the Code of Civil Procedure.

2. The suit was instituted by the Bank for recovery of an amount of Rs. 11,21,333.45 together with interest at 17% per annum with quarterly rests and charged on plaint schedule properties. The court below decreed the suit allowing the appellant to realise from the defendants a sum of Rs. 11,21,333.45 together with future interest at the rate of 17% per annum on the principal amount of Rs. 5,80,982.48 from the date of the suit, till realisation of the whole amount. Question of interest was considered as issue No. 4 in the suit. The court below decided the issue as follows:

"As per the agreements executed by defendants 2 to 6 as also late M.R. Prabhu, the plaintiff bank is entitled to realise interest at 4.5% above the Reserve Bank of India rate, with quarterly rest. Therefore, it cannot be said that the plaintiff bank is not entitled to charge compound interest. Issue is answered in favour of the plaintiff bank."

However, while granting the relief the court below held as follows:

"In view of my findings on the above issues, I hold that defendants 2 to 6 are liable for the plaint claim of Rs. 11,21,333.45 with future interest at the rate of 17% per annum on the principal sum of Rs. 5,80,982.48 from the date of suit till the realisation of the whole amount. I also hold that the plaintiff bank is entitled to realise the decree debt charged and by sale of the properties scheduled under the plaint. The plaintiff bank is also entitled to the cost of the suit."

3. Sri. Easwaran, learned counsel for the Bank submitted that the court below has committed an error in not awarding interest on the principal sum adjudged, that is, Rs. 11,21,333.45. Counsel submitted that the Bank is entitled to get interest at the rate of 17% per annum with quarterly rests. Counsel submitted that S.34 of the Code of Civil Procedure entitles the Bank to get future interest from the date of the decree till date of payment on the principal sum adjudged. The principal sum adjudged as far as the Bank is concerned is Rs. 11,21,333.45 and not Rs. 5,80,982.48. Counsel submitted that interest accrued on quarterly rests has to be added to the principal. Interest thus accumulated with the principal at the end of each quarter becomes the principal and never thereafter ceases to be dealt with as principal. When the interest accrued on quarterly rests is added to the original plaint claim, it will come to Rs. 11,21,333.45. Counsel placed reliance on the Full Bench decision of this Court in Thandamma v. Kuriakose (1962 KLT 184) as well as Bench decision of this Court in Indian Bank v. Abyson Rubber Industries (ILR 1995 (1) Kerala 399). Even though notice was taken out to the respondents there was no appearance on their behalf.

4. S.34 of the Code of Civil Procedure enables the court to award interest on the principal sum adjudged. The question that has to be considered in this case is whether interest at the rate of 17% per annum has to be charged on the original principal amount or on the amount adjudged as principal which takes in interest accrued on quarterly rests. A Full Bench of this Court in Thandamma's case (1962 KLT 184), supra and held that interest accumulated with principal at the end of quarter becomes principal and never thereafter ceases to be dealt with as principal. The said decision was followed by a Bench of this Court in Bank of India v. Mary George (1991 (2) KLT 226). The Bench held as follows:

"The direction regarding interest in mortgage suits is governed by the provisions of 0.34, R.11. The interest that thus accumulated with principal at the end of each quarter becomes principal and never thereafter ceases to be dealt with as principal. Therefore, in construing the word 'principal' occ